Meriaura Group Oyj, Inside information: Meriaura Group Plc and Summa Defence Oy to merge into a new group of companies in the defence sector

Transaction Overview - Meriaura Group Plc and Summa Defence Oy signed a conditional share exchange agreement to merge into a new group focusing on safety and security of supply in Finland, with dual-use technology playing a significant role [1] - The new listed company will be named Summa Defence Plc, with Meriaura Group's current shareholders holding 11.9% and Summa Defence's current shareholders holding 88.1% [1] - The transaction involves the sale of Meriaura Group's Marine Logistics business to Meriaura Invest Oy [1] Financial Details - Summa Defence's share capital is valued at around EUR 185 million, while Meriaura Group's is valued at around EUR 40.4 million [2] - The subscription price in the share exchange is EUR 0.04657136 per share, resulting in Summa Defence's shareholders owning 88.1% of the new group [2] - Meriaura Group's shares will increase to approximately 4,839,199,763 shares, with 3,972,398,486 shares directed to Summa Defence's owners [2] Pre-Transaction Activities - Summa Defence will carry out a directed paid share issue of around EUR 25.1 million to certain convertible bond holders and investors [3] - Summa Defence has entered into five share exchange agreements to acquire six companies as subsidiaries, including Lännen Tractors Oy and LightSpace Group Inc [3] - Summa Defence will also purchase Sybimar Oy shares from Aura Mare Oy, controlled by Meriaura Group's CEO and board members [3] Post-Transaction Shareholding - Meriaura Invest Oy will acquire approximately 79.4% of Meriaura Group's subsidiary Meriaura Oy for EUR 14.4 million [5] - Meriaura Group will acquire 330,675,334 of its own shares from Meriaura Invest Oy at a subscription price of EUR 0.04657136 per share [5] - The final shareholding structure will be: Summa Defence's founders and current owners (82.1%), Meriaura Invest Oy (11.2%), and Meriaura Group's current owners (6.7%) [6] Strategic Impact - The merger aims to create a strong group focusing on safety and security of supply in Finland, leveraging dual-use technology [1] - The transaction will result in an imputed write-down of approximately EUR 16.4 million in Meriaura Group, impacting the 2024 financial year [9] - The new group will focus on defence and security technology, with a medium-term goal of achieving EUR 500 million in revenue [30] Subsidiary Performance - Lännen Tractors Oy reported 2024 revenue of EUR 23.0 million and EBITDA of EUR -3.1 million [23] - Aquamec Oy reported 2024 revenue of EUR 4.8 million and EBITDA of EUR -0.2 million [24] - Uudenkaupungin Työvene Oy reported 2024 revenue of EUR 19.1 million and EBITDA of EUR 1.0 million [25] - IntLog Oy reported 2024 revenue of EUR 2.4 million and EBITDA of EUR 0.6 million [26] - LightSpace Group Inc reported 2024 revenue of EUR 0.2 million and EBITDA of EUR -1.8 million [28] Future Plans - The new group plans to begin large-scale drone production in Finland in early 2025, focusing on drones used in Ukraine [29] - The combined revenue of Summa Defence and its subsidiaries in 2024 was EUR 49.5 million, with a total order backlog of approximately EUR 200 million [30] - The company expects strong revenue and profitability growth for 2025, aiming for EUR 500 million in revenue in the medium term [30] Management Changes - A new Board of Directors is proposed for Meriaura Group, with Samuli Koskela as chairman [17] - Jussi Holopainen, CEO of Summa Defence, will become CEO of the new group post-transaction [17] - The management team will include Risto Takkala (CFO), Juha Vauhkonen (Director, Defence and Security Affairs), Tommi Malinen (Chief Sales Officer), and Tommi Manninen (Chief Communications Officer) [17] Industry Context - The merger responds to the need for security of supply and equipment, as well as the development of renewable energy in Finland [31] - Summa Defence focuses on companies with products suitable for both defence and civilian markets, aiming for international growth, especially in NATO member countries [21] - The war in Ukraine has highlighted the importance of rapidly deployable innovations in the defence sector [32]